You need a preapproval loan to make your life easier when you are looking to borrow money for a car, home or credit card. A pre-approval letter lets you know exactly how much you can spend and also puts you in a better position to negotiate; you will understand the cost of the loan before you end up getting something that you would otherwise never afford.
How do you get a pre-approval loan, here are some 4 simple steps to help you
Manage your credit card
The credit card is very crucial when you want to take out a mortgage. Lenders will review your credit card before they approve your loan to make sure you can clear the loan payments on time.
Learning about the credit card is important; it helps you understand how the credit card works and what lenders are looking for when they give you a loan and how a low score can affect the loan application.
Check the credit reports to see what they contain and make sure there are no errors or late payments on the report. Make sure you view the reports from each of the bureaus.
Fix all the errors on your credit report. The consequences of the errors and mistakes on your credit cards are severe; they can results to significantly higher mortgage rates of even a denial in your loan application.
Lenders ask for information about your income and finances so they can evaluate your loan application. Gather all your financial information before so you can get to know your finances
You need to prove to the lender you have sufficient income to take on a loan. The lenders calculate the debt to income ratio, which is the amount of money earns compared to the monthly loan payments.
Your debt to income ratio needs to be at least 35 percent if your want the mortgage application to be approved. You will need t submit copies of your finances to get a preapproval letter from the lender. All the information you provide should be accurate
Pick a great lender
Once you are done with the first two steps, you should start shopping for a lender. You probably need only one pre-approval letter but you also need to compare different loan costs before you settle for one lender.
Keep in mind that you are not obligated to use the lender that preapproved you but you should continue the preapproval letter with the lender who offers you the best terms.
Get quotes from different types of lender; enquire from local credit unions, credit card loans, banks, personal loans, online and p2p lenders.
Get a pre-approval and pre-qualification letter – lenders want to work for people who are pre-qualified for the loan. This means that their documentation prove they can clear the loan payments in time. a pre-qualification letter lets you know how much you qualify for so you can make house shopping easy.
After you talk to different lenders and make a final choice, you could apply for the loan. The only way to do this is make the application and wait for the response.